Soft credit pull

Businesses are constantly dealing with credit, whether it be their own, or the credit of their customers. If a business is going to fill purchase orders, etc. then they have to rely on the good credit of their consumers. This can pose problems for businesses if they do not take the time to understand credit, and the differences between hard and soft credit pulls.

Soft credit pulls are used for many reasons. For example, a business might do a soft credit pull as part of a background check for potential employees. This allows them to see the history of someone who might work for them.

Soft credit pulls are used to verify identity by banks, when your business applies for credit of some kind, banks will pull your credit. They will start with a soft credit pull, and if they are serious about lending to you, they will later do a hard credit pull. Soft credit pulls are also performed when a credit card company sends out those pre-approval forms, they do this to solicit companies and individuals. However, if you apply for these offers, or accept them, a hard credit pull will be performed before credit is actually issued. The same is true for mortgage loans, soft credit pulls are done for the pre-approval, a hard credit pull for the actual loan.

A soft credit pull is not going to affect your credit score, but it will affect your score if you have a hard credit pull. Soft credit pulls are typically for things like new jobs, new retail or rental spaces, and involuntary inquiries when other companies solicit you for business. Because these are not visible by other institutions pulling your credit, the pull will not impact your credit. In fact, when you check your own credit report to make sure it is accurate, or evaluate your score, you will be performing a soft credit pull. Existing creditors for your business may do regular soft credit pulls to insure that you are still worthy of the credit they are offering.

One of the things that are worth noting about soft credit pulls is that when you check your own credit, you can see who has done a soft pull on your company. You and the credit bureaus can see the inquiries made that fall under soft pulls, but other creditors cannot. This is great for you, and can help you keep tabs on, and control over your business financial situation.

Keep in mind the differences between soft and hard credit pulls as too many hard pulls can be damaging to your credit. If you notice something on your credit report that should have be categorized as a soft credit pull (such as an insurance inquiry), where you are not looking to extend credit, you should contact the credit bureau and have them change it.